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Italy backs out of race for bailout-fund chief ahead of key vote

Marco Buti, Italy’s candidate to lead the European Stability Mechanism, has withdrawn from the race, three officials and diplomats confirmed to POLITICO on Monday.

That departure leaves Portugal’s João Leão and Luxembourg’s Pierre Gramegna standing ahead of a vote to appoint the new head of the eurozone bailout fund later this afternoon, on the margins of a euro area finance minsters’ meeting in Brussels.

Any winning candidate needs the support of 80 percent of a vote weighted according to the capital provided by member countries to the fund. Germany and France both hold over 20 percent of the ESM’s capital, which effectively gives them a veto.

Rome chose to back Leāo, as does Paris, according to diplomats, which would give the Portuguese candidate over 50 percent of the vote. But Berlin backs Gramegna, and it’s unclear if Finance Minister Christian Lindner will use his veto to block Leāo’s appointment.

The fund’s current Managing Director Klaus Regling will step down in October, but earlier attempts at appointing a new head had failed due to Italy’s refusal to back down after Buti gathered the least support for his candidacy.

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